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Last month, Minister for Finance Brian Cowen did not make any change in the stamp duty system because he argued that any reduction would be countervailed by a rise in house prices. We also said last week that for much of 2005, the Irish Times Property Supplement, which is published on a Thursday, had about sixty pages per issues - about ten pages of editorial and the rest mainly full pages of colour display advertisements in the range of €12,000-€15,000 per page in revenue. From October, the number of full pages of advertisements fell. This trend accelerated from early November when the number of full pages sold had fallen to as low as three in some issues. This decline was far in advance of the normal pre-Christmas slowdown during the recent boom years. Thursday January 11, was in the first full working week post the Christmas holidays and in that Property Supplement issue of fourteen pages, there was only one full page of multiple display advertisements for second-hand houses - from Sherry Fitzgerald. Today's issue of twenty-two pages has two full pages of multiple display ads for second-hand houses - one from Sherry Fitzgerald and the other from Savills Hamilton Osborne King. There are eight full pages allocated to advertising. Two of them have corporate advertising as distinct from advertising for new or second-hand houses. While tracking advertising is not a scientific indicator and online advertising is not included, it would nevertheless be foolish to ignore the significant change from the comparable period in 2006.
Risk of negative equity A report published on Wednesday suggests that homeowners in parts of the Dublin commuter belt are now at risk of negative equity. Houses at risk are those on the periphery of the Greater Dublin area or away from public transport routes. The study, commissioned by the Society of Chartered Surveyors, found that there are people working in the Dublin area, commuting as much as 100 km from neighbouring counties. The report says there is a demand from people who bought homes outside Dublin to move back towards the centre, with areas like Dundrum, which are closer to the city centre and on a public transport route, are seeing big population increases. However, some areas a little further out in the Dublin suburbs such as Templeogue, Ballinteer, Tallaght and Blanchardstown are seeing falls in population. The Society’s president Conor Hogan said that people who are working in the Greater Dublin area are commuting from as far west as Portlaoise, up to the border in Newry, from Offaly and Westmeath and from as far south as Gorey in Wexford. He said those at greatest risk of negative equity would be those taking out a 100% mortgage on houses requiring a two and a half hour drive from Dublin. Hogan states that some areas near good infrastructure and transport links will do better than those with weak location attributes or services. This more fragmented market will give rise to a trend of diverging prices with certain areas remaining strong, whilst others will weaken over the next eighteen months”. “Based on the findings of the study, prices are expected to stabilise in some areas as overall demand and supply levels come close to equilibrium. Any price increases in 2007 are likely to be in single figures and in line with construction inflation. These will be most likely for housing in the better locations” The new study shows that the strong underlying demand for housing in the Dublin region is likely to maintain momentum through to 2009. Dr. Brendan Williams says that this demand is evident in the current population growth and migration trends (Population Change 2002-2007 map SCS Housing Study 2007 page 7). This is augmented by previous relative under-supply of housing, represented in high population to housing stock ratios, when compared with European and international averages, he points out. The urgent necessity for a separate planning and development body with central control over all Dublin regions, explains Conor Hogan, is evident by the fact that of the approximate 18,000 housing units built in the four Dublin Local Authorities in 2006 almost half have been provided in Fingal. There has been a continued under provision in other Local Authority areas, including most specifically Dun Laoglaire-Rathdown. ECB rate may rise to 4% this year European Central Bank President Jean-Claude Trichet signalled last Thursday that the ECB's key interest rate is likely to increase to 3.75% in March. A further hike to 4.0% in the autumn will be on the cards if the current prospects for global and eurozone economic growth remain bright. The ECB began its current series of monetary tightening in December 2005. If the rate will be 4% in December 2007, it will have been raised 100% in two years. While the SSIA bonanza will start flowing in the Irish economy in April, in addition to worries about a slowing property market and its impact on public finances (17% of tax revenues in 2006 were directly related to property. It gets more scary when related sectors are included), there are likely going to be a number of big job loss announcements in coming months that may shake consumer confidence. As we reported last year, Proctor & Gamble's 600 person plant in Nenagh is in peril and is currently subject of a review; 1,000 jobs at Xerox in Dublin are at risk and Vodafone may cut a significant number of jobs. RELATED Trichet signals rise of ECB key interest rate to at least 3.75% in March
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